SOURCE: Flexible Plan Investments. These charts are used for illustrative purposes only and are not meant to represent actual accounts or strategies.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Please read Flexible Plan Investments' Brochure Form ADV Part 2A carefully before investing.
INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX. THESE RESULTS DO NOT REPRESENT ACTUAL TRADING OR CLIENT EXPERIENCE.
How different diversification styles can affect portfolio volatility and respond to market changes:
Multi-strategy diversification
Multi-strategy diversification is our solution to reducing volatility in an attempt to achieve better results through full market cycles. This approach can be effective for investors no matter when they become invested during a market cycle.
Diversification styles
Illustrated portfolio of traditional asset class diversification
A portfolio of multiple equally-weighted asset classes is a simple form of risk-management which may increase potential performance, but much of the volatility remains.
Diversification styles
Illustrated portfolio of actively managed strategies
A portfolio combining equal weights of actively managed strategies further reduces volatility, and the investment path narrows.
SOURCE: Asset Data - Morningstar and Yahoo Finance, Hedge Fund Data - BarclayHedge. Equal Weight Hedge Fund Index Allocation consists of equal weight allocation to multiple Barclay indices including Convertible Arbitrage, Global Macro, Equity Long/Short, and others.
Active management approach
Bull market
Can allocate to trend-following, high-beta, and leveraged strategies in rising markets.
Active management approach
Sideways market
Can allocate to mean-reversion or pattern recognition strategies which can profit from volatility and market swings.
Active management approach
Bear market
Can allocate to inverse, leveraged inverse, or strategies with defensive asset class exposure that may profit from falling markets.